NASHVILLE, Tenn. (WKRN) — If you’re looking for a place to live, you probably think renting is less expensive than buying a house. But one study is showing that might not be true in Nashville.
Research from Clever, a real estate data company, found renting is cheaper than buying a home in most major U.S. markets. Nashville was one of seven cities where rent price increases surpassed home price gains.
Since 2000, rent prices in Nashville have increased 256%, compared to home value prices, which increased 179%.
For renters moving to Nashville, apartment locators like Joel Sanders see customers experience sticker shock daily.
“People have nearly $2,000 budgets sometimes these days, and a lot of times they would have been able to afford a one-bedroom [apartment] and had their choice of one-bedroom,” said Sanders, who is the President and CEO of Apartment Insiders. “Now that’s starting to get more limited, and those people are wanting to find a roommate so they can get nearly a $3,000 two-bedroom in Nashville.”
What used to be a mortgage payment doesn’t even cut it when it comes to the cost of Nashville rents nowadays.
“People that are able to afford a $2,300 mortgage payment, right now once you include taxes and insurance, and you look at what your options are to buy in Nashville as interest rates have recently risen quite a bit, you don’t have a lot of options,” Sanders said.
As a result, the American dream of owning a home is taking a back seat. It’s also creating a new problem.
“So those people get pushed into the rental market and they are able to afford a $2,300 apartment, and when there’s that high-quality demand there, that is one of the issues that’s driving up rental rates,” Sanders explained.
Researchers at Clever Real Estate found that over the last two decades, Nashville had the biggest rent increases out of all the major markets they studied.
“It’s simply unsustainable. The increase in the cost of living and wages and salaries are not increasing alongside that cost of living. It is simply more expensive to afford the simple financial comforts that previous generations have been able to afford,” said Danetha Doe, economist for Clever Real Estate.
Both Doe and Sanders emphasized wages aren’t keeping up with these rising rents, or the historic inflation the U.S. is currently seeing. Clever Real Estate’s research found that U.S. rent prices are rising four times faster than wages.
“I would say that I’m deeply concerned,” Doe said. “That means that the money that they are bringing in isn’t going as far as it used to, whether that’s covering groceries, covering rent, covering their mortgage payment, covering transportation. We all know that prices have been increasing as well. And that’s becoming tough for families and individuals that are simply trying to make ends meet.”
Doe added people also don’t have money left over to spend on extras, which has an impact on quality of life.
For renters moving to Nashville, Sanders said many are having to choose between location, amenities, and whether to split their rent with a roommate. He said renters are willing to drive out to places like Columbia, Clarksville, and Ashland City to find more affordable housing.
Sanders hopes rents will stabilize based on how many apartments are currently under construction, however, he said it’s too soon to tell.
For more information on Clever Real Estate’s study, click here.